Despite years of reasoning, wheedling and sermonizing from financial advisers and retirement planners, nearly half of all workers who change jobs cash out their 401(k) plan savings instead of leaving them to grow, either there or in some other form of tax-deferred account, according to a new study.

This behavior, at best, deprives workers of years of compounding, which can do miracles for even modest sums. At worst, it could undermine the entire premise of these "defined contribution" retirement plans, which is that a combination of worker prudence, employer assistance and tax benefits will enable workers to build up adequate nest eggs for their retirement years.

And there are additional costs. Cash withdrawn from a 401(k) is subject to ordinary income taxes. For workers younger than 59›, there is a 10 percent tax penalty as well.

Cashing out has long been most common among workers with small balances, and it remains so, the survey found. Some 87 percent of workers with accounts of less than $5,000 opted to take cash, as did nearly three-quarters of those with balances between $5,000 and $10,000. But even as balances approached $50,000 the survey found one in five workers taking the cash, and even among accounts of $80,000 to $89,000 some 10 percent of job changers cashed out.

The majority of those who did not cash out rolled their balances over into individual retirement accounts. Others left the money with their previous employer or transferred it to their new employer's plan. All of those moves avoid taxes and penalties and allow the money to continue growing tax-deferred.

The study did not look at what workers did with cash when they took it, but Stacy Schaus, a consultant with Hewitt Associates, the benefits consulting firm that did the study, said anecdotal evidence suggests most of it went for such things as living expenses and

credit card debt. Even if the job changers reinvested the money in a taxable account, they would have lost from taxes and penalties.

Cash-outs were most common among younger workers, who, of course, are most likely to have small balances. But these younger workers are precisely the ones who can benefit from decades of compounding.